Relative strength index


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Relative strength index

Used in technical analysis, it is a measure of the number of days a stock increases in value relative to the number of days it decreases in value. The rule of thumb is that values over 70 suggest overvaluation and hence selling where as values around 30 suggest undervaluation or buying. Of course, this indicator completely ignores all fundamental information about the firm's prospects and, hence, is problematic to use as a stand-alone indicator for an investment strategy.

Relative Strength Index

A measure of the performance of a stock relative to its industry or the performance of an industry relative to the market as a whole. A stock (or industry) outperforming its industry (or market) for a given period of time has a relative strength index value above 1; this is seen as a bullish sign for that stock (or industry). On the other hand, a stock (or industry) underperforming its industry (or market) for a given period of time has a relative strength index value under 1; this is seen as a bearish sign.
References in periodicals archive ?
It noted that technical indicator based on relative strength index continued to trend up after recently recovering from the oversold level.
"The recent relief is natural as the daily RSI (relative strength index) indicator has reached the oversold territory but no signs of reversal have been spotted yet, knowing that the next support level comes at 9,500 points before 9,270 points," Kamco said in its technical analysis.
The 14-day relative strength index for Brent was 20.7328 today and has been below 30 since Sept.
The measure's 14-day relative strength index stayed above 70, the level that typically indicates a drop.
The 60-day relative strength index shows equities barely above fair value and while the 50-day moving average remains in support and a sideways market is the most likely scenario, according to strategists.
The FTSEurofirst 300 index was also nearing "overbought" levels, with its Relative Strength Index (RSI) - a technical momentum indicator that determines overbought and oversold conditions - having hit 68.7.
The Korea Composite Stock Price Index (KOSPI) finished down 0.03 per cent at 2,197.82 points, and the KOSPI's 20-day relative strength index hit 75, above the overbought territory mark of 70.
Welles Wilder and introduced in his 1978 book, New Concepts in Technical Trading Systems, the Relative Strength Index (RSI) is an extremely useful and popular momentum oscillator.
Over the next few hours of trading, the rise in global equities paired with higher commodity prices may drive the GBP/JPY higher to retrace the decline from earlier this month but at the same time, as the relative strength index continues to push into overbought territory, gains are likely to be capped, and we may see the pair fall back to cover the gap from the 120 SMA at 152.86.
The four-hour chart has long shown oversold conditions -- the Relative Strength Index falling below 30.
Papa Securities expects more of these short-term periods of strength in the coming days especially with the divergence situation of the relative strength index, a key technical indicator, remaining intact.
Weekly relative strength index indicator is currently looking bearish, while the daily one is also negative but resides in the oversold territory," Kamco said in its technical analysis.

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